Adderall XR, indicated for ADHD, also decreased 16% to $112.3 million, due to generic competition.

Royalties decreased 36% to $36.3 million primarily due to lower Adderall XR royalties received from Impax Laboratories (IPXL) as a result of lower volumes and a lower royalty rate payable since the launch of a new generic product in 2012.

Adjusted research & development (R&D) costs increased 15% to $235.9 million in the reported quarter. Selling, general & administrative (SG&A) expenses decreased 5% to $390.4 million.

In the fourth quarter of 2012, Shire initiated a share repurchase program of up to $500 million. As of Jul 24, 2013, Shire repurchased 9.6 million shares at a cost of $289.9 million.

Outlook Upgraded

Shire now expects to achieve double digit growth in earnings in 2013. The Zacks Consensus Estimate currently stands at $6.72.

For 2013, Shire expects product sales growth in the mid-to-high single digits on the back of improved performance in the second half of 2013.

Royalties and other revenues are now expected to decline by 35% – 40% in 2013 from 2012 levels, compared to the previous guidance of a decline of 30%-40%.

Shire now projects combined R&D and SG&A expenses to be marginally higher in 2013 versus 2012 as compared to the previous estimate of a low single digit growth.

Pipeline Update

Shire’s acquisition of SARcode added a phase III candidate, lifitegrast, to its pipeline, which is being developed for the signs and symptoms of dry eye disease. The phase III studies are fully enrolled and Shire expects data from the same in the first quarter of 2014.

Meanwhile, Shire continues to evaluate Vyvanse for binge eating and major depressive disorders. Phase III studies on binge eating disorders are fully enrolled and data is expected in 2014.

We are impressed by strong second quarter results and pipeline progress. Shire is well placed in the ADHD market driven by key drug Vyvanse which is now being developed for additional indications as well. We are also encouraged by Shire’s recent acquisitions with an aim to develop a new business unit in ophthalmology.